Norway oil refinery
OSLO: Norway is working on a mechanism to preserve its low hydropower reservoirs, effectively limiting electricity exports to western Europe just as its energy crunch deepens.
Refilling dams will be prioritised over power production when levels fall below seasonal averages, Petroleum and Energy Minister Terje Aasland said in a statement yesterday.
“In practice, this will involve control mechanisms that limit the possibility of export in the event of low reservoir filling,” the minister said in the text of a briefing for parliamentary party leaders.
The ministry will this week work to lay the framework so the new mechanism can be put in place as quickly as possible, he said.
The country is one of Europe’s top exporters of electricity.
However, water levels in southern Norway are already so low that the government said it needs to act now to prevent domestic shortages this winter.
As Europe’s energy crisis worsens, any restriction would be yet another blow for nations from Germany to the United Kingdom who rely on cheap Norwegian hydropower to help keep the lights on.
Aasland and prime minister Jonas Gahr Store met with parliamentary leaders yesterday morning to brief them on the power market situation and parliament may be called back from its summer break to address the issue.
The energy minister also confirmed that an increase to a programme to help consumers and farmers cover soaring power costs will be brought forward a month to Sept 1.
Norway isn’t an European Union (EU) member, but is part of Europe’s single energy market and its rules state that countries aren’t allowed to curb flows to neighbours for prolonged periods.
Cuts would only be allowed if an emergency situation is declared.
And the lobby group for the nation’s utilities said any potential curbs to Norwegian electricity exports need to follow EU power-market rules.
“If there is something that we do not need in a difficult time, it is to undermine the cooperation and the predictability of power trade and flow that the European energy transition depends on.
“This also includes Norway’s commitment to that cooperation and rules of exchange,” Toini Lovseth, executive director of markets and customers at industry group EnergiNorge, said by email before the minister’s statement.
Norway gets almost all of its electricity from its vast hydro resources.
Historically, it has been able to export a hefty surplus and still have among the lowest prices in Europe.
But after a dry spring, hydro reservoirs in the worst impacted area stand at 49.3%, compared with a median of 74.9% for the 2000-19 period.
Norway now has more water in the reservoirs than the authorities’ earlier forecasts indicated for the beginning of autumn, Aasland said.
The probability of needing electricity rationing in the winter is “low,” he added, citing forecasts from regulator NVE.
Utilities benefit from selling electricity abroad, especially when prices are as high and volatile as they are now.
The nation’s biggest power producer, Statkraft AS, supports “a well-functioning market system for power where Norway can import power in dry years and export power when we have a power surplus,” it said by email.
However, it declined to comment further on any potential curbs. — Bloomberg
